What Should You Do With an Old 401(k) After Leaving a Job?
If you've recently left a job, you may be wondering what to do with the 401(k) you left behind.
You have several options. You may be able to leave the money in your former employer's plan, move it to a new employer's 401(k), roll it into an IRA, or take the money out.
The important thing is that you don't have to make a move just because you left your job.
Don't Start With the Rollover. Start With the Decision.
It's easy to think an old 401(k) should automatically be rolled into an IRA. But that's not necessarily the right answer.
Before moving the money, take a look at what you have now and compare it with your other options.
That includes things like:
- What you're paying
- The investment choices available to you
- Whether your new employer's plan accepts rollovers
- What services and advice are available
- How the decision could affect your taxes
- How you'll eventually use the money in retirement
- How the account fits with your other investments and retirement savings
Sometimes leaving the money where it is makes sense.
Sometimes moving it to a new employer's plan makes more sense.
And sometimes an IRA is the better fit.
There isn't a rollover decision that's right for everyone.
Don't Overlook the Option of Taking the Money Out
Taking the money out is another option, but it's one that deserves some attention.
Depending on your circumstances, a distribution from a 401(k) can create taxable income and potentially an additional tax penalty.
If you need the money, that's one conversation.
If you're simply trying to decide what to do with an old account, taking a taxable distribution may create a problem you didn't need to create.
Look at the 401(k) as Part of Your Retirement Plan
An old 401(k) is just one piece of your overall financial picture.
The decision about what to do with it can affect how your retirement savings are invested, how you'll access the money later, and how the account fits with your retirement income strategy.
At E.P. Wayne Financial Group, we help individuals and families in Columbia, Forest Acres, and surrounding communities look at those choices as part of their broader retirement planning.
There is no reason to move a 401(k) just to move it.
If you're trying to decide what to do with an old 401(k), we've put together a more detailed look at the options and what to consider before making a decision.
401(k) Rollover Planning in Columbia, SC
The goal isn't simply to move the money. It's to make a good decision about where it belongs and how it fits into your retirement plan.